The Increasing Value of Brand in B2B Markets
In business-to-business (B2B) markets, brand often does not receive as much attention as it should. Many companies attribute their success to non-brand factors such as their ability to meet specifications, the performance of their solution, and the expertise or relationships of their sales force. However, B2B brand strategy will be much more important for the success of B2B companies going forward, due to the following market dynamics:
- Greater commoditization makes it more difficult for companies to differentiate their offerings along concrete dimensions, such as performance features
- Expansion of credible low-cost competitors which can now effectively meet customer’s requirements and aggressively use price to enter or expand across markets
- Increasing variety and complexity of offerings makes it more difficult for customers to comprehend all the benefits of a supplier’s offerings and effectively compare “apples to apples”
- Growth of eCommerce allows customers to choose how to discover offerings, evaluate their options, and even transact online, bypassing traditional sales channels that in the past have been important in communicating the value and benefits of a suppliers’ offering
Given these dynamics, brand becomes a greater source of value for B2B companies. Compared with a set of features or specifications, a strong brand is more difficult for competitors—especially low-cost competitors—to effectively match. In addition, the more variety and complexity there is in offerings, the more important brand becomes to help customers be confident with their purchase decisions. In an environment that requires a complex marketing mix, brand perception takes on a heightened role in customer’s decision making.
There are many components to building strong brands. Having a well-designed brand architecture can be a powerful lever for a company to generate more value from its brands. In our experience, we have found that:
- Establishing and leveraging a strong corporate brand can increase the value of a company’s offering brands and make the company more attractive to other stakeholders, such as channel partners, employees, and investors
- Better coordination across offering brands allows a company to more effectively leverage an offerings’ brand equity across its portfolio, and emphasize areas of expertise and enable portfolio/solution selling
- Simplifying brand architecture allows companies to better focus its resources and the customer’s attention on key brands, building greater brand equity
In our recent white paper, B2B Brand Architecture: How to Build Value in a Changing Marketplace, we explore in detail each of these lessons learned and explain how B2B companies can apply them.
Companies should evaluate the opportunity to improve their position through a more active approach to brand architecture. Those already engaged in this process should consistently review and adjust their brand architecture to ensure they are maximizing the value of their brands.